Joe Biden 2020 campaign megathread v3 (pg 45 - mass-dropout aftermath)

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

Its how economics works. Taxing corporations/muh evil rich people kills investment by taking capital away that would otherwise be invested and used to create jobs, and that effect is compounded by taking money out of the economy to pay for bigger gimme programs. Robbing the rich hurts poor people too.

That is not in fact how economics works. Your argument rests on equivocation on the meaning of the word "investment."

First sense of the word "investment" - On the one hand, there is the commonplace way people use the word "investment" to mean "investing" in stocks or bonds. This sense of the word "investment" simply means ownership/purchase of stocks/bonds/financial assets.


Second sense of the word "investment" - On the other hand, the other more technical way of using the word "investment" (i.e. how "investment" is defined in terms of its contribution to GDP) means firms spending money on plant/equipment/other things needed to produce output over the longer term.


By casually linking these two different meanings, the implicit assumption you are making is that if people "invest" in the first sense, this either amounts to the same thing as or directly and necessarily leads to investment in the second sense.

It is this implicit assumption that is incorrect.


Investment in the second sense is not determined by how much money/financial assets are held by wealthy people or corporations. If Mike Bloomerg owns $1.1 trillion worth of stocks as compared to $1 trillion worth of stocks, that does absolutely nothing to increase investment in the second sense. This is because money/financial assets does not just passively spend itself (in this case spending it on investment in the second sense); it requires someone to actually spend it, which is an action that someone must actively take. If Mike Bloomberg has $1 trillion in financial assets, there is no mechanism or reason to automatically make him or any corporation increase investment in the second sense (plant and equipment).

Instead, investment in the second sense is determined by whether or not businesses expect that if they build more plant and equipment, they will be able to profitably sell the output that can potentially be produced using the new plant and equipment that would be created by investing in the second sense. If you are a businessman and you don't expect to be able to profitably sell output, then you don't produce. If you do expect to be able to profitably sell output, then you do produce. You don't produce more than you expect to be able to profitably sell, because then you are losing money. In other words, how much you produce is determined by expected demand for your output. The same holds true for investment in the second sense for plant and equipment (since that is a prerequisite for producing output, and if you build excess plant and equipment, then you end up with idle plant and equipment that is just sitting around deteriorating and costing you money).

I would hope that the rest would be obvious, I assume it is?

I will also quickly add that it is true that increasing taxes on i.e. billionaires can reduce economic activity, but the mechanism through which it may do so is not via reducing investment, but rather by reducing the consumption spending of the billionaires. For example, if Mike Bloomberg is taxed enough, at some point he will spend $30.999 million on TV ads in Iowa rather than $31 million. In practice, this isn't much of a concern especially for the super-wealthy, because their spending is not particularly affected by how much exactly their wealth is, but is instead limited by them running out of things that they can think of to spend it on. This is much more of a consideration for taxing (or alternatively giving money to) poor or middle class people, whose spending is actually financially constrained to a far, far greater degree. The implications of that ought to be fairly obvious.

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

The rich aren't just stuffing all their money under the bed or something: even if I decide not to invest it, spend a moment of my time thinking about it, or anything fiscally related, all that money is still in the bank, being loaned out to businesses, innovators, and consumers, helping the economy grow, keeping capital lines open, and helping Americans of all stripes.

Factually incorrect. Banks do not loan bank deposits, nor is their ability to make loans in any way constrained by the amount of deposits deposited with them. Saying so is strictly a categorical error roughly equivalent to saying that "cows are a type of building."

There is no particular connection with how many bank deposits rich people (or poor people) have and the ability/willingness of banks to make loans, or of the desire/creditworthiness of firms (or people) to take out loans.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

The rich aren't just stuffing all their money under the bed or something: even if I decide not to invest it, spend a moment of my time thinking about it, or anything fiscally related, all that money is still in the bank, being loaned out to businesses, innovators, and consumers, helping the economy grow, keeping capital lines open, and helping Americans of all stripes.

Factually incorrect. Banks do not loan bank deposits, nor is their ability to make loans in any way constrained by the amount of deposits deposited with them. Saying so is strictly a categorical error roughly equivalent to saying that "cows are a type of building."

There is no particular connection with how many bank deposits rich people (or poor people) have and the ability/willingness of banks to make loans, or of the desire/creditworthiness of firms (or people) to take out loans.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy

Banks do make loans on the basis of capital that is put into them. That's literally how banks work. Why else do you think banks would take deposits? They like paying you money in interest fees?

That is a common misconception (and I don't/can't really blame you for it precisely because it is such a common misunderstanding). But if you want to know "literally how banks actually work", as opposed to how you think "literally banks work," then read the link, it explains.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy

Regarding your statement that "banks make loans on the basis of capital that is put into them" it is true that the banks *own* capital constrains bank solvency (which is not the same thing as constraining bank loans, however). But Banks' *own* capital is a different thing from deposits that other people/firms deposit in banks. When you deposit your personal money (or a firm's money) in a bank, it is not correct that the bank "loans your the money you have deposited out."

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

I know what you're talking about. It's still stupid bs, so you can go off with it. Yes, a bank will not take the $5 you deposited and loan it out. However, what they do do is use it to increase their lending capacity to make increased loans, which serve LITERALLY THE SAME FUNCTION! The economic effect is the same.

You clearly didn't bother to read the link and are still repeating falsehoods, so I'll post it again for you -

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy

But I guess that is the Republican thing these days, just repeating falsehoods without caring that they are false, cuz why not?

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

https://www.investopedia.com/articles/investing/022416/why-banks-dont-need-your-money-make-loans.asp (this source talks about how each dollar deposited has a multiple effect, but the point is the same in that deposits allow them to make increased loans)

It is false that deposits multiply into loans, but it sounds like you looked at least a bit at the Bank of England article and recognize that that is false, so this is at least some progress.

It is false that deposits allow banks to make more loans. As the BoE link also says in more detail, consider that if you don't deposit your money in a bank, then the alternative is that you have spent the money on something, i.e. by writing a check, in which case your bank account is debited, so you have less deposits, and the account of the other business/corporation/person is credited, so they have more deposits. What does this other person/business/corporation do with it? This leaves the overall amount of deposits essentially unchanged regardless of whether you personally choose to keep a deposit or to spend it (of course, you can withdraw cash from a bank, but in reality the amounts of cash that are circulating in the economy are comparatively small, especially in the modern world where things like credit cards and checks are commonly used as means of payment). So the idea that an individual person like you making a bank deposit allows the banking system to make more loans is incoherent partly because your act of depositing in a bank doesn't change the total amount of deposits in the banking system as a whole - it just means that the particular bank that you have deposited in has more deposits, as opposed to another bank that would end up having more deposits instead if you alternatively spent the money (again, to be precise, this is aside from small amounts of literal cash that circulate in the economy, which are not particularly important because they are very small and don't vary much).

So if your act of depositing or not depositing has no effect on the amount of deposits, what does determine the amount of deposits in the banking system? The amount of loans that banks make determines it.

Everything you're saying makes 0 sense and is completely ridiculous. Stop posting Keynesian bullsh**t, especially when it's not even relevant. Your link is talking about Central Bank monetary policy and how interest rates are adjusted, but you are completely ignoring common sense and the topic at hand. Do you really mean to deny that money being deposited in a bank doesn't increase that banks ability to make loans? If so, why do you think banks take deposits? Charity?

As far as supposed "Keynesian bullsh**t" goes, what I said is that:

Instead, investment in the second sense is determined by whether or not businesses expect that if they build more plant and equipment, they will be able to profitably sell the output that can potentially be produced using the new plant and equipment that would be created by investing in the second sense. If you are a businessman and you don't expect to be able to profitably sell output, then you don't produce. If you do expect to be able to profitably sell output, then you do produce. You don't produce more than you expect to be able to profitably sell, because then you are losing money. In other words, how much you produce is determined by expected demand for your output.

(emphasis added). In other words, what I said is precisely that businesses do not operate as charities - they decide to produce or to not produce something (or in the case of banks, to provide banking services or not to provide banking services) on the basis of whether they expect it to be profitable or not.

This is entirely consistent with your apparent belief that businesses do not operate as charities. Indeed, if you do in fact believe that businesses operate not as charities, but instead to make a profit, then you should ask yourself the question - "why would a business produce something if they don't expect to be able to sell it for a profit?" The answer is that they would not (or at any rate, if they do, then they will lose money, which will tend to drive them out of business, and so over the long run they won't, because they'll be out of business). Which means precisely that how much gets produced is limited by how much demand is expected. So if you are logically consistent in your apparent belief that businesses do not operate as charities, then you believe that the output is limited by expected demand; i.e. you are a Keynesian yourself.



Regarding the second part of what you said:

Your link is talking about Central Bank monetary policy and how interest rates are adjusted, but you are completely ignoring common sense and the topic at hand. Do you really mean to deny that money being deposited in a bank doesn't increase that banks ability to make loans? If so, why do you think banks take deposits? Charity?

First of all, not all banks (depending on how you define a "bank") do actually take deposits. IIRC all retail FDIC banks do (probably what you are thinking of when you talk about "banks") in part because that is a legal requirement of being a FDIC commercial/retail bank.

As mentioned above, banks do not operate charities and exist in order to make a profit. Banks make profits by maintaining positive interest rate spreads between their assets and their liabilities. This is not the same thing as "taking deposits" and it is not necessary for banks to take deposits in order to maintain positive interest rate spreads between assets/liabilities.

When banks get more deposits, what this means is that at the end of the day they clear with other banks and the Federal Reserve, and they have more reserves as a result (and reserves held in the banks' account at the Fed are assets of banks). This is probably what you are trying to get at, but are not saying it right.

Why would banks want to hold reserves? A few reasons. First, in the US, currently they are required to hold some by regulation. This is unnecessary though and doesn't have any impact except for acting as a tax on banks and reducing their profits (Canadian banks do not have reserve requirements, and they do just fine and Canadian banks are quite ordinary and unremarkable). Secondly, banks want to hold some reserves in order to maintain liquidity. Banks can convert reserves in their account at the Fed on demand, so by holding some reserves, banks have a liquidity cushion enabling them to give their customers cash if/when their customers ask to make a withdrawal from their checking accounts.

Thirdly, currently the Federal Reserve pays interest on reserves - and in fact this interest is higher than the interest that banks pay you on your checking/savings account. So banks are happy enough to hold your deposits and earn a positive interest rate spread and make money off of you, by receiving more interest on reserves from the Fed than the interest they pay to you on your deposit (note that none of this involves banks making any additional loans). Although ideally, banks would rather hold some other asset instead of reserves that will earn them an even larger interest rate spread.

Currently though, and ever since 2008 in the era of quantitative easing, banks have WAYYYY more reserves than they actually want. https://fred.stlouisfed.org/series/EXCSRESNS

So it should be clear that reserves are not any sort of limit on loans, and all that needs to be done to have more loans is not simply for banks to have more reserves (and certainly is not simply for banks to have more deposits either).

Instead, the amount of loans that are made is determined by (and limited by) how many loans bank think that it will be profitable for them to make (as you correctly say, banks are not charities - they try to make a profit). If there are creditworthy borrowers who banks think will not default on their loans and can pay enough interest so that banks can make a profit, then the bank will make a loan. If not, then the bank won't make a loan. I.E. the amount of loans is limited by the (creditworthy) demand for loans (which can be influenced to some degree by the Fed's monetary policy/interest rates, because interest rates impact both interest rate spreads that banks can earn and how much demand there will be for loans).

This is all explained better and in more detail at the BoE link, which really is worth closely reading if you are genuinely interested in understanding.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

One last point - we shouldn't really derail this thread further because this is supposed to be the Biden megathread and has drifted off topic (if you want to continue we can continue via DM or maybe on the economics board, but at this point all that really remains is for you to inform yourself by reading the Bank of England link and researching).

you are completely ignoring common sense and the topic at hand.

According to common sense, the world is flat and the sun revolves around the earth. Also, apparently according to many Republicans' understanding of "common sense," Trump is completely innocent and did nothing wrong. So common sense can be and often is entirely incorrect and misleading. Common sense can and does lie to you, and if you are interested in correctly understanding how the world works, you are making a mistake if you unquestioningly rely on common sense, in general.

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

There is absolutely nothing on the ground that confirms this.

Wishful thinking by POLITICO.

It is Politico, what do you expect???

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

The way that most poll respondents decide who they think is the most "electable" is simply:

1) Who have they heard of/who has high name ID.
2) Who is ahead in primary polls/who appears to be winning the primary.


The first is essentially irrelevant to GE electability, because whoever the nominee is will end up having very  high/universal name ID.

The second is actually somewhat related to GE electability, but only very loosely so. And the problem is it changes as soon as someone different starts winning a primary. For example, once Obama started winning some states in the primaries in 2008, perceptions of how "electable" he was shot through the roof, even though there was no actual change in anything about Obama personally.

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

Biden has canceled ad spending in Nevada:

Well, that is interesting... The question is why?

a) They are out of money/need money for IA/NH/SC more
b) They think they have it locked up
c) They think they can't win it

Which of those is the case?

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

If Klobuchar misses the threshold in a lot of places, we might see her organizers make up for some of what the Biden campaign couldn't manage.

The Klob camp is not likely to direct its supporters to switch to Biden, because Klob is going for the moderate lane, which is taken by Biden. The scenario for Klob to win is for Biden to stumble early on in IA, her to do better expected in IA, and her to then surge as moderates rally around her as an alternative and abandon Biden.

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

Joe Biden, just now, on Pete Buttigieg: "I know Barack Obama. He's no Barack Obama."

Technically that is true. Obama had the black identity. However, instead of the black identity, Pete offers the gay identity, which I would say is a good substitute. And it is sort of better than the black identity now, since Obama was already the first black President, that status is already taken.

But Pete and Obama do share a lot in common. Identities such as:

1) Midwesterner
2) Young

And in addition, Pete offers some identities that Obama never had, such as Veteran.

And they are both good orators and charismatic, and consequently appeal to suburban voters such as myself.

So overall it is unfair to say that Pete is no Obama. While it is true that Pete is not black, he offers many other appealing identities in its place.

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

Biden's new attack ad against Pete....

https://twitter.com/NumbersMuncher/status/1226200604218994689

I believe that this is an unfair attack against Pete.

Colorfully illuminated rivers are an important amenity. Also, pet chips for escaped pets are an important issue. When my dog escaped last year, we were able to find him because of the chip. And think about it, colorfully illuminated rivers would make it easier to find an escaped Pet, because you would better be able to see their silhouette at night. Finally, I like decorative brick. Sidewalks should be decorative brick, and to imply otherwise is poor taste. Fortunately, Pete has good taste, not surprisingly given his sexual orientation. As for African Americans, there are no African Americans in New Hampshire, so I don't think it is a big deal to fire a police chief or something.

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

If Biden ends up being a paper tiger and rational Dems have to rely on Bloomberg to save us from breadline praising Bernard Sanders..... SDFJGHKSHAKALFJDLA

You don't have to vote for Bloomberg, you can vote for Pete.

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

Biden needs to be in the retirement home. That’s his crowd.

I’m 30. I’m 100% for Biden.

You don't mean 100 years old and 30% for Biden?

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

Uncle Joe may never win a single primary or caucus despite having run for President 4 times over a time-span of fully 36 years. But he will always be the favorite in our hearts. So yes, he is the favorite in that sense, and in the end isn't that the sense that matters?